Milk price shake-up
One dollar milk products may have been removed from one supermarket chain’s shelves last week, but a Longwarry dairy farmer has said there is still a long way to go in in improving market prices.
John Versteden, who also is an Australia Dairy Farmer board member, agreed Woolworth’s decision to remove its $1 milk was a game changer. But, he said it was only the first step in securing prices and he hopes other supermarkets will follow.
“It’s been a long campaign and it hasn’t finished yet,” he said.
Supermarkets introduced $1 per litre fresh milk products eight years ago. Since then industry groups have called for fairer returns to farmers and urged consumers to buy branded milk products to ensure profits were being returned to farmers.
On Tuesday, Woolworths increased its $1 milk products to $1.10, declaring the extra 10 cents per litre would be returned to farmers.
While the initiative will only deliver the higher milk prices to 450 Australian dairy farmers supplying Woolworths branded fresh milk, Mr Versteden said it was about restoring confidence in the industry
“It’s about getting some value back in the chain and that will reflect back to farmers. The $1 milk devalues the product on the supermarket shelf.
He said the value of dairy products across the board were inadequate, not just $1 milk. He said $6 blocks of cheese equated to about 60 cents per litre for milk, which was a far more significant issue than $1 milk.
Mr Versteden said the Woolworths announcement showed they realised dairy communities were under extreme pressure,
“So it is a start. It probably won’t be a game changer for the majority of farmers as there are only about 450 farmers supplying to Woolworths.
“Ten cents a litre on the cost of milk isn’t a lot for the consumer but it makes a significant difference at the farm gate.
“This is the first step in getting some fairness back in the market,” he said.
The latest national dairy farmer survey found farmer confidence in the future of the industry had dropped from 75 per cent to 47 per cent over the past four years.
Woolworths chief executive officer Brad Banducci said industry groups had made it clear the outlook remained extremely tough for dairy farmers.
“This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live. It’s clear something needs to change and we want to play a constructive role in making this happen,” he said.
Australian Dairy Farmers chief executive officer David Inall said there was no doubt it was a game changer in the fight against discount dairy that has long frustrated the industry.
“It is reassuring that Woolworths has committed to deliver the full 10 cent increase back to those farmers who supplied the milk into that product category.
“Removing $1 milk is not just intended to restore farmers’ financial confidence, but it will also boost confidence in regional communities and small businesses that rely on the industry.
Agriculture Minister David Littleproud said the $1 milk disaster began in January 2011 and he hoped last week’s decision by Woolworths was the beginning of the end.
“Coles and Aldi continue to sell milk at $1. This drives down prices to farmers. Supermarkets can’t pretend selling milk cheap doesn’t hurt farmers and they’ve got to be called out on this rubbish.
“The ACCC report into the dairy industry clearly says supermarkets use their market power to drive down how much they pay processors, and processors then use their bargaining power to drive down what they in turn pay farmers.
“Selling milk cheaper than water devalues the product and the work farmers put into it,” Mr Littleproud said.